Aviation sector has biggest pandemic default risk: insurance poll
[LONDON] The aviation sector carries the biggest risk of corporate default as a result of the coronavirus pandemic, according to a survey of insurers published by broker Gallagher on Tuesday.
Only 29 per cent of credit and political risk insurers had seen claims directly related to the virus so far, the survey of underwriters, conducted in June and July, showed.
Companies or lenders buy credit insurance to get cover for non-payment for goods or services.
Pandemic-related credit insurance claims are, however, likely to rise later this year or early next year, as businesses struggle to stave off default, said Matthew Solley, managing director of structured credit and political risks at Gallagher.
Aviation, oil and energy, and tourism were the three sectors in their portfolios that concerned insurers the most.
Virgin Australia, Air Mauritius and Colombia-based Avianca are among airlines to have ceased operations in the past few months, with planes grounded by lockdowns around the world.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Insurers also worry about non-payment by governments, with Zambia seen the biggest risk.
In the broader political risk insurance market, which can cover issues ranging from expropriation to war, Argentina was seen as the biggest concern.
The survey of 76 underwriters from 46 firms in Lloyd's of London and the broader London commercial insurance market was carried out between June 24 and July 9.
REUTERS
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Banking & Finance
Australia banks shower investors with A$5 billion in buybacks
Bank of Japan’s Ueda signals chance of policy action if yen moves affect inflation
Fed’s Kashkari says rates likely on hold for ‘extended period’
FTX has billions more than needed to pay bankruptcy victims
UOB Q1 profit down 1.6% to S$1.49 billion
AI risks to financial stability are already a central bank worry